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Singapore authority partners financial inclusion foundation

Monetary Authority of Singapore report: includes case studies on digital ID in Brunei, Cambodia, Ghana and Kenya

The Monetary Authority of Singapore (MAS) has become the first central bank to join the Mojaloop Foundation – a US-headquartered non-profit organisation focused on improving financial inclusion in the developing world using financial technology.

Mojaloop provides open-source software that it describes as a ‘blueprint’ for organisations to build interoperable digital payment systems. Banks, government offices and other entities looking to build inclusive payments platforms can use it – whole, adapted or as a real-time ‘payments reference’ model.

Interoperability of payments systems is seen as one of the toughest challenges facing organisations and initiatives that seek to drive financial inclusion.

The MAS-Mojaloop partnership will see the two organisations working together to boost access to affordable financial services through digital currency-based settlement systems and ‘foundational digital infrastructure’, according to a jointly-issued press release.

The collaboration will also seek to build on MAS’s central bank digital currency (CBDC) experience with Project Ubin, a public-private initiative exploring the application of blockchain to clear and settle payments and securities.

Firm foundations ‘critical’

The link-up is announced one month after MAS issued a 58-page publication of direct relevance.

The authority’s report, ‘Foundational Digital Infrastructures For Inclusive Digital Economies’, notes that foundational digital infrastructures – systems that allow different users and different digital devices to seamlessly interact with one another – are ‘critical’ for more pervasive and inclusive digitalisation across societies.

Foundational digital infrastructures are defined as public goods that governments have a crucial role in providing or facilitating. Governments can do this through direct provision, or developing open standards for technical implementation, or guidance on best practices, the report says.

Four pillars that underpin effective foundational digital infrastructures are highlighted: digital identity to ensure authentication and validation of an individual’s identity, while protecting privacy and security of information; authorisation and consent to ensure transparent and secure digital transactions through authorised use of data and mechanisms for obtaining users’ consent; payments interoperability to ensure systems for clearing and settlement of payments between users are interoperable, for seamless domestic and cross-border transactions; and data exchange to enable users to make their data accessible to third-parties.

The report includes case studies on digital ID in Brunei, Cambodia, Ghana and Kenya.

MAS’s track record adds ‘rigour’

The MAS-Mojaloop link-up involves the former’s chief fintech officer, Sopnendu Mohanty, becoming an adviser to the latter’s board of directors; and Alan Lim, who is division head of MAS’s fintech infrastructure office, joining Mojaloop’s technical governing board. 

“Our vision of universal financial inclusion is a world where everyone, everywhere can access and use the financial services they need to lead a more productive life, using a simple mobile-phone,” said Kosta Peric, chair of the Mojaloop Foundation and deputy director of the Bill & Melinda Gates Foundation’s (BMGF) ‘Financial Services for the Poor’ programme.

“MAS’s track record of innovation in regulation and payments brings credibility, new rigour and talent to the Mojaloop community, which can help our partners drive broader adoption of inclusive domestic and cross-border payment platforms that reach and benefit the poor,” added Peric, who joined the BMGF in 2013 after a more than 20-year career with interbank payments network SWIFT.

“Technology guided by empathy can help bring innovative solutions to real-world problems and promote an inclusive economy,” said Mohanty. “MAS is excited to join the Mojaloop Foundation to support its open-source technical development and contribute expertise on digital currency-based settlement infrastructure to Mojaloop’s payment system for domestic and cross-border transactions.”

The BMGF, Rockefeller Foundation, Google and San Francisco-based blockchain start-up Coil are among what Mojaloop describes as its ‘sponsor-level members’ – a status now held also by MAS.

Mojaloop builds on hackathon success

Mojaloop was one of three winners of the global ‘ISO 20022 hackathon’, recently organised by the Bank for International Settlements (BIS) Innovation Hub and SWIFT. The competition asked teams to create solutions focused on the potential of ISO 20022, a new global standard for electronic payments messaging, and Application Programming Interfaces (APIs) to improve cross-border payments.

Three teams – Mojaloop, as well as London-headquartered Atomic Wire, and a joint-team from US-headquartered Virtusa and AWS – were announced as winners during the BIS Innovation Summit during March.

Mojaloop – which is headquartered in the town of Wakefield, Massachusetts – won for a solution focused on improving cross-border payments to users in emerging market economies who rely on mobile money-transfer systems.

BIS Innovation Hub’s Singapore head, Andrew McCormack, summarised the context of the hackathon by saying that “for many, sending money across borders can be slow and expensive”.

The MAS-Mojaloop link-up will also ‘provide new opportunities for the fintech ecosystems’ in Singapore and Asia-Pacific, according to the announcement.